Developers would customize financial statements depending on the type of loan they were seeking. If the loan was relatively small, a developer might submit a very conservative financial statement. If it was a larger loan, some of the values on the statement could be inflated somewhat.
As long as the developer listed all his assets, then lenders could always review property valuations with their own experts, Furnish says.
This is not to say the developers could run amok with widely varying versions of financial statements, Furnish says.
If developers such as Symington concealed debts, then lenders would have no way of making an accurate assessment of the developer's net worth. In such cases, lenders, and possibly prosecutors, could squarely lay the blame for submitting a false financial statement on the developer.
In Symington's case, Furnish says there really is only one crucial question concerning his financial statements that needs to be resolved.
"The worst thing that could get him into trouble is if he had a debt or two or three that he didn't list," Furnish says.
The government alleges exactly that.
Defense No. 9: The Kitchen Sink
One of the strongest charges in the government's case against Arizona Governor J. Fife Symington III is also one of the simplest to explain. And because it is so simple, Dowd will likely have to pull out all the stops--blaming others, confessing to inadvertent error and boring or confusing the hell out of the jury--if he is to defend his client successfully against it.
The government accuses Symington of preparing two different financial statements, both dated December 31, 1990. Those statements--which showed net worths that varied by $9.5 million--were later submitted to two different lenders.
Not only did Symington prepare two statements for the same date; the government also alleges Symington then lied to a third lender by falsely claiming he had never prepared a December 31, 1990, financial statement.
In May 1992, Dai-Ichi Kangyo Bank asked Symington for a copy of his December 31, 1990, financial statement. Rather than sending either of the two statements he had prepared, Symington sent Dai-Ichi a letter claiming he had a net worth of $5.4 million as of December 31, 1990.
The government charges Symington knew the $5.4 million net worth was a phony number because he had prepared another financial statement using current real estate values that showed he had a negative net worth of $4.1 million.
The two radically conflicting financial statements appear to support the government's contention that Symington prepared rosy financial statements when he wanted a loan and presented a negative outlook when it was time to repay.
Dowd has told prosecutors that Symington used different methodologies to prepare the two radically different financial statements. The one that shows a $5.4 million positive net worth was, Dowd says, based on Symington's long-term view of the value of his real estate projects. The other, which shows a negative net worth of $4.1 million, was based on the current value of his real estate, the lawyer claims.
Dowd says both financial statements are correct.
The government disagrees.
In September 1991, Citicorp Real Estate, Inc., also asked Symington for a copy of his December 31, 1990, financial statement.
Rather than sending either of his two December 31, 1990, financial statements, Symington simply sent Citicorp a letter claiming he had not prepared a December 31, 1990, financial statement.
"In fact, as defendant Symington well knew, he had prepared two personal financial statements dated as of December 31, 1990," the government alleges in count 20 of its indictment.
Coopers & Lybrand, in its settlement agreement with federal prosecutors, says one of its former accountants, the late John Yeoman, helped draft the deceptive Citicorp letter later sent by Symington. Public records have not revealed Dowd's reply concerning Symington's Citicorp letter. Dowd last week declined to discuss the case.
The criminal charges stemming from the letters Symington sent to Dai-Ichi Kangyo and Citicorp appear to be free from the complexities that dog much of the rest of the case against Symington. It is such simple examples of apparent deceit that will likely make or break the criminal case against the governor, says ASU law professor Dale Furnish.
"If he's lying to Dai-Ichi by concealing debts and by making it look like he's got more net worth than he's got, then he's in trouble and there's not much you can do to defend that," Furnish says.
But Symington knows he has many cards to play before his case is concluded. The governor has long lambasted courts for providing too many rights to the accused.
"The courts have fashioned a broad range of criminals' rights that greatly hinder every phase of criminal justice, from arrest to trial to punishment," Symington told members of the Arizona Town Hall meeting last month.
Despite Symington's public disdain for such rights, it's clear his defense intends to exercise every one.
